The changing landscape of employee rewards: Observations and prescriptions

This article examines the dramatic changes in employee rewards since the Center for Effective Organizations (CEO) was created 35 years ago. The article first examines ten major changes in employee rewards, including a reorientation toward the external labor market; attempts to become more strategic; new rewards models; changes in base pay, benefits, and incentive practices; and changes in governance. Next, it considers macro factors explaining these changes, including labor supply and demand, workforce composition, competitive pressures, globalization, the decline of manufacturing, diminishing unions, technology, and regulatory and legislative changes. The article concludes with prescriptions for the future, including greater business leader direction for rewards, an investment perspective on rewards, and the radical shift in rewards mix from benefits incentives for performance and development.